Card Factory in £225m refinancing; may raise £70m

Shares of Wakefield-based greeting card and gift retailer Card Factory plc fell about 15% on Friday after it published an update on trading since the re-opening of non-essential retail and said it completed a £225 million refinancing with its current banking syndicate.

Card Factory said the refinancing facilities “are structured to incentivise an early reduction of overall debt with fees of up to £5m payable if pre-payments are not made in line with specified dates from 30 November 2021 through until 30 July 2022.”

The company added: “Subject to prevailing market conditions and upon taking independent advice, the company intends to use its best efforts to raise net equity proceeds of £70m to facilitate these prepayments.”

On trading, Card Factory said: “Initial strong demand has been satisfied, with store like-for-like sales for the first five weeks marginally down compared to the same period in 2019.

To date, increased spend per transaction has primarily offset the reduced retail footfall: customers are shopping less frequently but buying more.

“We continue to monitor changes to customer behavior to meet their needs.   

“Our Everyday Card and party ranges have performed strongly, with a clear early trend of customers shopping more evenly during the week. 

Sales from the online channels have fallen, as expected, as customers have also been able to shop in our stores, albeit online sales are still exceeding pre-pandemic levels, with performance in line with management expectations.”

On the refinancing, Card Factory said: “The increased bank facilities of £225m provide additional liquidity above the original £200m it replaces, and is for the same term through to 24 September 2023 (with provision for a potential extension).

“As at 16 May 2021, net debt amounted to £110m (excluding deferrals of approximately £40m, substantially agreed with stakeholders) (16 May 2020 net debt: £132.5m).”

Card Factory CEO Darcy Willson-Rymer said: “I am pleased we have secured increased banking facilities, which afford the group the headroom required to focus on realising the growth strategy. 

“In particular, enhancing our card-led proposition through all sales channels and accelerating the increase in our capability and capacity to fulfil sales demand via our online channel, and so capitalise upon the move to online adopted by more customers over the last year. 

“We welcome our colleagues and customers back into our stores, providing the quality ranges at competitive prices which our customers have missed whilst stores were closed. 

“As national restrictions are eased, we continue to prioritise providing a safe working and shopping environment in all our stores.  

“The strong trading performance in our stores over the last few weeks reflects the extensive preparations to maximise meeting our customers’ needs completed by the wider Card Factory team.”